from the it's-all-part-of-a-business-model dept

As you may have heard, earlier this week Apple announced a bunch of things -- and that included that U2 was releasing a surprise new album that everyone who uses iTunes would magically get automatically for free in their library. That struck some people as interesting, given that the band has long crusaded angrily against "free." Four years ago, we wrote about how Paul McGuinness, the band's long-time manager, was railing against "free." Here's what he said at the time:

If you had to encapsulate the crisis of the music industry in the past decade, it would be in one momentous word: "free." The digital revolution essentially made music free. It is now doing the same with films and books. For years we (and by "we" I mean the music business, musicians, creative industries, governments and regulators) have grappled with this new concept of "free." One minute we have fought it like a monster, the next we have embraced it like a friend. As consumers, we have come to love "free" - but as creators, seeking reward for our work, it has become our worst nightmare. In recent years the music business has tried to "fight free with free," seeking revenues from advertising, merchandising, sponsorship - anything, in fact, other than the consumer's wallet. These efforts have achieved little success. Today, "free" is still the creative industries' biggest problem.

Bono has repeatedly attacked the idea of free music, complaining that it's "madness."

Music has become tap water, a utility, where for me it's a sacred thing, so I'm a little offended."

Funny, it seems even more ubiquitous under this deal.

Of course, the other side will argue, this is different. This is "okay" because they got paid upfront. Bono himself still seems offended by the concept of free, but insists this doesn't count because it's not really free:

“We were paid,” Bono tells TIME. “I don’t believe in free music. Music is a sacrament.”

Bono, U2’s lead singer, alluded to the deal himself at Apple’s event. After the band performed, he and Mr. Cook playfully negotiated over how the album could be released through iTunes “in five seconds.” Mr. Cook said it could if the album was given away free.

“But first you would have to pay for it,” Bono said, “because we’re not going in for the free music around here.”

Mr. Oseary, who took over management of the band less than a year ago, stressed in a phone interview after the event that the music still had value even though it was being given away.

“This is a gift from Apple to their customers,” Mr. Oseary said. “They bought it and they are giving it away.”

But, as per usual, this (once again) misunderstands the nature of "free." For years we've tried to hit back on this notion. As we've said free is not the business model, but free should be a key part of the business model, with the idea being that "free" helps the artists make more money. And that's exactly what's happened here. Now, of course, because of U2's stature and Apple's billions in cash, this could be done as a big upfront deal (rumors are saying that Apple will pay somewhere around $100 million total). But for others it may involve giving away stuff free to build a larger audience for shows. Or maybe it involves getting money upfront via a crowdfunding campaign and then sharing the music widely. Or maybe it involves using a tool like Patreon to get people to pay for each new track released, but still making them more widely available for free.

The point is that "free" is not some evil. It's something that the public really appreciates, and when done right fits very nicely in with a smart business model. For U2 that's collecting millions in cash from Apple. For others, it's other things. Free is not evil. It's a tool, and one that can be used to make people lots of money -- as U2 and Bono are realizing, even if they don't "realize" it. Amusingly, since these tracks are automatically showing up in everyone's iTunes, some are actually arguing that it becomes the equivalent of junk mail. In other words, there's an argument to be made that this promotion which effectively pushes "free" tracks even to people who don't want them does a lot more to decrease the value of the music than any sort of unauthorized files sharing. At least with file sharing, people get the free music because they want and value it.

In the end, though, I tend to agree with Amanda Palmer's take that everyone should be doing all kinds of business model experiments, so I certainly have no problem with this particular one. In fact, I think it's great.

It would just be nice if U2 and its managers could admit that maybe "free" isn't automatically evil.

from the indecently-speaking dept

We've been following a series of cases over the past few years concerning the FCC's attempt to fine TV stations for "indecency." These cases include "fleeting expletives" like Bono cursing during an awards show ("this is fucking brilliant") to fleeting nudity like the Janet Jackson wardrobe malfunction... and, the case that just got decided: NYPD Blue's episode where actress Charlotte Ross is shown getting ready for a shower, dropping her robe and having her bare buttocks on screen for approximately seven seconds. As we noted, when the FCC originally went after ABC for this footage, it helped drive millions of people to go seek out the footage online, getting her butt a lot more attention than if they'd just let it go. Either way the case has meandered through the courts, with an early decision saying the policy was a First Amendment problem and a later ruling striking down the fine.

Some of the cases involving both fleeting expletives and fleeting nudity got merged into one along the way. The Supreme Court actually already had this case a few years ago and rejected one of the lower court decisions that found the policy "arbitrary and capricious," but failed to rule on whether the fine was legal. The appeals court, on remand, still tossed out the ruling, now saying that if the policy wasn't arbitrary and capricious, it was too vague.

The Commission failed to give Fox or ABC fair notice prior to the broadcasts in question that fleeting expletives and momentary nudity could be found actionably indecent. Therefore, the Commission’s standards as applied to these broadcasts were vague, and the Commission’s orders must be set aside.

That said, the Court (as it has been doing with annoying regularity these days) was very, very careful to try to make the scope of the ruling as narrow as possible. In this case, it specifically refused to rule on the First Amendment question of whether or not the FCC's indecency policy violated the First Amendment. That's too bad. Justice Ginsburg did issue a very, very brief concurrence, in which she suggested that the Court really ought to review its original ruling (FCC v. Pacifica) which established that the FCC could issue fines for indecency on TV. In other words, she seems to think that it's time to review the First Amendment question:

In my view, the Court’s decision in FCC v. Pacifica Foundation, 438 U. S. 726 (1978), was wrong when it issued. Time, technological advances, and the Commission's untenable rulings in the cases now before the Court show why Pacifica bears reconsideration.

Furthermore, even in the majority opinion, there are hints of concern about the First Amendment issues raised here:

This would be true with respect to a regulatory change this abrupt onany subject, but it is surely the case when applied to theregulations in question, regulations that touch upon “sensitive areas of basic First Amendment freedoms,” Baggett
v. Bullitt, 377 U. S. 360, 372 (1964); see also Reno v. American Civil Liberties Union, 521 U. S. 844, 870–871 (1997) (“The vagueness of [a content-based regulation of speech] raises special First Amendment concerns because of its obvious chilling effect”).

Hopefully, this means that if the First Amendment question does finally come before the court, it's ready to overturn that earlier ruling. Of course, I'm still amazed at how this very same Supreme Court always seems to ignore the "obvious chilling effect" issue when it comes to cases involving copyright law... but that's another story for another post.

from the you're-not dept

Remember a few months ago when we noted that all the heads of the major Hollywood studios had changed their tune, in the light of reports of yet another record box office year, to start claiming that movie piracy was harming indie movie producers, even as many of them had learned to embrace the internet to do quite well for themselves? It seems the same basic thing has been happening in the music business as well. We've already noted how folks like Bono and Paul McCartney have been heard complaining to the press about how piracy was harming up-and-coming musicians (noting they couldn't really complain given their success).

So, dear Rock Stars -- the problem here is not with the internet. It's not with how it 'hurts' the little people. WE LOVE IT! It's you. You and your expectations of wealth-beyond-measure are screwed. And I don't care.

Here's a headline for you -- in the 3 weeks since I made 'Behind Every Word' available for free download, I've sold more CDs and downloads that in any one month since 6 months after it first came out.

This a four year old album. I've done no gigs in that time, I've taken out no ads, I've not given away a single bit of physical anything that cost me money. I've just talked about it, and invited people to listen to it. And guess what? They listened, and those who really liked it THEN PAID. And they paid more for the 'free' download they they do on iTunes.

I couldn't possibly have done it without 'free music', without the internet, without sharing, without streaming. Nor could I have done it within the insanely restrictive copyright terms of a standard recording contract.

Shane Richmond, who pointed Lawson's post out to me, notes that (of course) some will respond (as they always do, every time we post an example of a success story) that musicians like Lawson are "outliers" and successes on the margin. But, Richmond, notes, the true outliers are the folks like Bono and McCartney:

Steve -- and the growing number of artists like him -- will probably be dismissed as outliers taking a path that works for a lucky few but not for everyone. The thing is, that's true of the record industry too. A lucky few artists get rich while the majority are hoping just to break even before they have to give up their dreams and go and get a proper job.

Indeed. This is the very point that we've been trying to make so long. So many of the artists that we highlight as success stories would never have been successful at all without the internet and embracing what it allows. Because the old system was entirely about outliers. The traditional recording business was a lottery ticket. A tiny few made it. And everyone else failed. With what technology allows today, plenty of musicians will fail to make a living. It's no guarantee that anyone can be a success. But there are much greater opportunities, and (the best part) musicians have more control and say in how their careers go, giving them a greater chance to actually be successful on their own terms, not the terms of four large (but shrinking) companies, and the very small number of rock stars they helped succeed in the past.

from the speaking-from-ignorance...-and-admitting-it dept

It's one thing to speak from a position of ignorance, but admitting it and still then taking a strong position? That's something special. U2's Bono kicked off quite a firestorm by insisting that having ISPs monitor everything was a good way to deal with unauthorized file sharing online, citing China's success with internet censorship (failing to realized that it hasn't been that successful in reality). This resulted in widespread criticism of Bono and it appears that Nirvana's bass player, Krist Novoselic, has stepped up to defend Bono (found via Karl Bode). But what's stunning about Novoselic's "defense" is that he flat out admits he doesn't really understand the details and still defends Bono:

I'll admit that I'm not up to speed on having ISPs regulate copyrighted material, but here's why I agree with Bono on the idea of compensation for content providers

So he doesn't understand the issue, but he supports Bono's position anyway? Yeah, that's reasonable. And the worst part is the end of that sentence. It implies that some people out there don't support compensation of content providers. That's silly. Everyone supports the compensation of content providers -- they just don't support that compensation coming from some sort of involuntary tax put on internet connections. Assuming that being against ISP tracking and payments means that there's no other way for content providers to get paid is simply wrong.

The rest of his post is interesting, but either pulls out some old canards or is self-contradictory. For example, he confuses "value" with "price" by warning that music can't be worth nothing. Yet, at the same time, he goes on and on about how great things like YouTube and Twitter are for promoting his music -- while also wishing they would pay him for promoting his music. He never seems to put two and two together to realize that by promoting music and bands, a fan base is built up that helps an artist make more money -- and YouTube and Twitter are doing this for free. Prior to the internet becoming mainstream, if a musician wanted to communicate with fans, it was an expensive and time consuming direct mail process. Now Twitter has made that free for bands. Before, if a band wanted to get fans to see its videos, it had to hope it could get them on MTV. Even after the internet came about, communicating with fans was still expensive and time consuming, as was posting videos. Twitter and YouTube have made these things much easier, faster and cheaper for bands. And he's complaining?

from the out-with-the-old... dept

It's no secret that Paul McGuinness, U2's longtime manager, has been making bizarre and easily refuted claims that everyone but the music industry is at fault for not making U2 even richer than it is. And that's because they're all conspiring to bring piracy to the world, which is destroying music revenue while pumping up the revenue of lots of other companies. Of course, none of that is true. Music-based revenues continue to climb quite nicely, and the revenue that ISPs and Google and others are making from "piracy" is barely worth mentioning. Does anyone really think that broadband would have noticeably fewer customers without music piracy going around?

Still, there had been some question about what U2's outspoken frontman, Bono, felt about these issues. Back in 2008, he did say that he mostly agreed with McGuinness that somehow ISPs were to blame for all of this. Then, in early 2009, there was an amusing interview where he basically said that piracy is bad, but he couldn't really speak out against it because he was too rich, and people would point that out.

Apparently he forgot that part.

As pretty much all of you are sending in, Bono has posted his regular NY Times column, about 10 big things that are important for the next 10 years and apparently, protecting his royalties... I mean... stomping out piracy makes it to number two on the list. It's the same McGuinness blather, of course. Apparently, piracy is really all the ISPs' fault:

A decade's worth of music file-sharing and swiping has made clear that the people it hurts are the creators -- in this case, the young, fledgling songwriters who can't live off ticket and T-shirt sales like the least sympathetic among us -- and the people this reverse Robin Hooding benefits are rich service providers, whose swollen profits perfectly mirror the lost receipts of the music business.

Hmm. So, apparently all the money that people used to spend on music, they now spend on internet connections? If only there were some evidence to back that up. But, as we noted, the music business has been growing, just not the sales of CDs. Considering how much U2 made on its last tour, you would think that Bono would be aware of this. As for his claim that the internet is harming the up-and-coming songwriters, again, all this shows is how incredibly out of touch Bono is. In the past, the "young, fledgling songwriter" couldn't live off ticket or t-shirt sales either. He had to hope that he got the lucky golden ticket from a record label and that they didn't then crush his spirit and originality before discarding him as an unrecouped has-been.

Today, however, the opportunities for the young, fledgling songwriter to build a following, build a business model and make a living have grown tremendously. Ask Jonathan Coulton. Or Corey Smith. Or Matthew Ebel. Or Moto Boy. Or any one of thousands of other songwriters who didn't go the major label route, but have figured out ways to make a living (or better) that simply would not have been possible just a few years ago.

So what's Bono's solution to this non-problem? Apparently it's for ISPs to spy on what everyone does and to fork over money they get to the musicians (well, he says musicians, but what he really means is the major record labels):

But we know from America's noble effort to stop child pornography, not to mention China's ignoble effort to suppress online dissent, that it's perfectly possible to track content.

Now, Bono is technically (beyond his role with U2) a venture partner at the venture capital firm Elevation Partners, and you would think that would require some basic level of technological knowhow. But, you get the feeling Elevation brought him on for his star power, rather than his keen technology insights, or he might realize that neither America's efforts to stop child pornography, nor China's efforts to suppress online dissent have worked very well. Neither has shown that it's "perfectly possible to track content." In fact, they've shown the reverse. They've shown that the more you try to track people, the further underground they go.

And is Bono really (really?) suggesting that we force ISPs to use the same tactics used to try to silence dissent in China to protect his royalties? Yikes.

Perhaps movie moguls will succeed where musicians and their moguls have failed so far, and rally America to defend the most creative economy in the world, where music, film, TV and video games help to account for nearly 4 percent of gross domestic product.

The problem here is that, again, Bono seems to equate file sharing with a loss of money or decrease in output from the wider creative industries. He's flat out wrong. The overall industries continue to grow. It's just a small group of the more powerful middlemen, who have refused to adapt and change with the times, who are stuck in the past. And it's because of their own unwillingness to adapt, that they may be losing some money. But the creative output, and the economic impact of those overall industries continue to grow, no matter how confused some rockstar on a crusade might be about them.

So if we're looking for big trends over the next ten years, how about we learn to stop listening to out of touch rockstars who insist they know stuff they are clearly uninformed about (or, rather, informed by a few biased and factually-challenged parties)?

from the interesting-reasoning dept

U2's manager, Paul McGuinness has made some news in the past few years for blaming absolutely everyone but the recording industry for the recording industry's problems. According to McGuinness, it's the fault of digital "hippies," cable operators, ISPs, device manufacturers, P2P software companies. Could it be the fault of an industry not adapting? Of course not. It's that everyone else needs to craft ways to help U2, a band that had just brought in $355 million in a single tour when McGuinness made those comments, more money.

It's that last point that apparently has Bono being a bit more cautious than his manager in lashing out. Bono has made some statements in support of his manager -- including a letter last year that seemed to blame tech companies. This, despite the fact that he's supposedly a venture capitalist, whose firm has invested in numerous tech companies, including Palm -- and U2 has done deals with Apple for special iPods and more recently, with RIM. I guess it must be other tech companies he's talking about.

However, in an interview with USA Today, Bono has expressed his distaste for file sharing, while admitting that he really can't lead the fight since he makes so much money already, recognizing how easy it would be to target him for appearing to be a hypocrite:

"It's not the place for rich rock stars to ask for more money, but somebody should fight for fellow artists, because this is madness. Music has become tap water, a utility, where for me it's a sacred thing, so I'm a little offended."

Of course, he might want to think about why that is. The fact that he's still able to bring in millions on tour, and has a huge multi-million dollar deal with Live Nation certainly suggests that perhaps file sharing isn't destroying the industry, as he suggests.

from the blame-game-come-uppance dept

In the past year or so, U2's manager, Paul McGuinness has lashed out at pretty much everyone, other than those in the music industry, for the evils of file sharing. His main target was ISPs, but also device manufacturers, search engines, social networks and many, many others. It wasn't long after this that U2 lead singer Bono more or less agreed with his manager -- though using more diplomatic language. However, as a few folks are joyfully noting, it appears that the only one to blame for the leak of U2's most recent tracks may in fact be Bono himself. Apparently, someone was passing by Bono's beach villa in the south of France and heard the stereo playing incredibly loudly with new U2 tracks, so he recorded them and put them up on YouTube.

To be honest, this story has a lot of questionable elements to it, and little to back it up. So it could be entirely false. Even if it's true, it's difficult to see how the quality could be even halfway decent. Either way, though, it does show how silly it is to blame others. Instead, why not look to examples like Radiohead and Nine Inch Nails who have shown that when you control the leak, it can work to your advantage in a rather massive way?

from the blame-the-enabler dept

About a month ago, we wrote about how Paul McGuinness, the manager of U2, was repeating an earlier rant blaming pretty much everyone but the recording industry for the recording industry's troubles. Basically, the rant could be summed up:

All of these other companies actually had the foresight to see where the market was heading with digital music, and they built up businesses that made money! The actual recording industry, however, did not foresee any of this, did not build up the business models -- and, in fact, stuck to the old, increasingly obsolete business model so stubbornly that it actually pissed off many fans. Therefore, it's clearly the fault of those who accurately prepared for the changing marketplace, and they should give lots of money to the companies that deliberately chose to ignore these trends.

Well, that may be a bit of a paraphrase, but I think it's pretty close.

Anyway, despite him ranting on in such a misguided fashion for quite some time, U2's Bono has been too busy saving the world to weigh in on the matter... until now. Valleywag points us to the news that Bono has written a letter to NME Magazine, where he, too, claims that it's all the fault of these damn ISPs and tech companies building real business models that make the market for music more efficient and open up all these new opportunities to profit. However, he does choose to contradict his manager on one point: arguing that McGuinness is wrong to claim that Radiohead's experiment with pay-what-you-want for music backfired and hurt the industry. Bono claims that the experiment was "courageous and imaginative." The same, however, cannot be said for all those tech companies that actually enabled that courageous and imaginative experiment to take place. They're obviously just exploiting the musicians.